Reported Decision : (2006) 147 LGERA 457 Land and Environment Court of New South Wales CITATION : Wambo Coal Pty Limited v Mine Subsidence Board [2006] NSWLEC 528 APPLICANT: Wambo Coal Pty Limited PARTIES : RESPONDENT: Mine Subsidence Board FILE NUMBER(S) : 30584 of 2005 CORAM: Lloyd J KEY ISSUES: Question of Law :- statutory interpretation - where meaning is ambiguous or obscure - underlying purpose or object - entitlement to compensation for expense incurred in preventing or mitigating reasonably anticipated subsidence damage LEGISLATION CITED: Interpretation Act 1987 ss 33, 34 Mine Subsidence Compensation Act 1961 (NSW) ss 10(3)(a), 12, 12A, 12B, 13A CASES CITED: Kingston v Keprose (1987) 11 NSWLR; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 DATES OF HEARING: 26/05/2006 DATE OF JUDGMENT: 08/24/2006 APPLICANT: M J Leeming SOLICITORS: Sparke Helmore Lawyers LEGAL REPRESENTATIVES: RESPONDENT: P J McEwen SC SOLICITORS: Trisley Kilmurray Lawyers JUDGMENT: - 8 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Lloyd J Thursday, 24 August 2006 LEC No. 30584 of 2005 WAMBO COAL PTY LIMITED v MINE SUBSIDENCE BOARD [2006] NSWLEC 528 JUDGMENT Introduction 1 HIS HONOUR: The applicant, Wambo Coal Pty Limited, seeks payment from the respondent, Mine Subsidence Board, of the sum of money in respect of expenditure incurred in anticipation of subsidence damage to its surface drift conveyor as a result of the workings conducted on the land underneath. This is the separate determination of the question as to whether there is an entitlement under s 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) ("the MSC Act") to claim compensation for expense incurred in preventing or mitigating reasonably anticipated damage prior to any subsidence occurring or, alternatively, whether it is necessary for damage resulting from a subsidence to have occurred prior to any claimable expenditure being incurred. There was no suggestion that this Court does not have jurisdiction to determine this question. Background facts 2 I do not understand that any material facts in the present case are in dispute. On 17 February 1992 the applicant obtained a development consent for works which included, inter alia, the erection of a surface drift conveyor. The conveyor, approximately 1.07 km in length, was then constructed in 1999 and commissioned for operation shortly thereafter. A third party, namely United Colliers Pty Limited, conducts underground coal mining in the locality. 3 In August 2003, a firm of consulting civil structural and maritime engineers, C W Henstock and Associates Pty Limited, prepared a report on potential subsidence impacts on the conveyor arising from the anticipated commencement of two underground workings directly underneath, Long Wall 3 and Long Wall 4. The engineers predicted a maximum ground subsidence in a transverse direction along each opening in the order of 1.3 metres. They also predicted that the conveyor would suffer strain, curvature and tilt with rotation which in turn would cause warping/deformation of welded support frames, torsional or bucking failure of tubular columns and shear failure of bolted sections. The engineers recommended consideration of four options to meet these predictions, one of which was to dismantle the conveyor before the underground mining operations occurred. 4 In November 2003, a firm of geological engineers, G E Holt & Associates, provided a further assessment of the potential subsidence associated with anticipated underground mining operations in Long Wall 3 and Long Wall 4. Their estimate was of a range between 1.65 and 1.92 metres. 5 Because of the concern over the potential subsidence causing inevitable damage to its conveyor, the applicant opted to dismantle it and re-use in some other location. The conveyor was removed in two stages between February 2004 and November 2004. It is common ground that that it was reasonable to anticipate some damage to portions of the conveyor arising from the predicted subsidence, if it were left in the state it was. 6 Mining operations by United Colliers Pty Limited in Long Wall 3 and Long Wall 4 began and the subsidence commenced to occur in the areas at the times agreed to by the experts engaged by the parties and which occurred reasonably approximated that which was estimated to occur. 7 On 19 February 2004, the applicant lodged a claim for compensation under s 12A of the MSC Act for expenses it incurred in dismantling and removing the conveyor. On 27 April 2005, the respondent refused the claim. On 14 June 2005 the applicant commenced the present proceedings in this Court pursuant to s 12B of the MSC Act. Legislative provisions 8 The MSC Act makes provisions in certain circumstances for payment of compensation to owners of property which has been damaged by subsidence. Section 12 provides for claims for damage arising out of subsidence and s 12A provides for claims for damage arising out of actions to prevent or mitigate damage. Section 12A relevantly states: 12A Claims arising out of actions to prevent or mitigate damage: (1) Subject to this section, claims may be made under this Act for payment from the Fund of: (a) compensation for damage incurred as a result of the exercise by the Board of its powers under section 13A, and (b) an amount to meet the proper and necessary expense incurred or proposed by or on behalf of the owner of improvements or household or other effects in preventing or mitigating damage to those improvements or household or other effects that, in the opinion of the Board, the owner could reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise, from a subsidence that has taken place, other than a subsidence due to operations carried on by the owner. … 9 Section 13A is in the following terms: 13A Works for prevention or mitigation of damage from subsidence The Board may carry out, or cause to be carried out such works as, in its opinion, would reduce the total prospective liability of the Fund by preventing or mitigating damage that the Board anticipates would, but for those works, be incurred by reason of subsidence, whether or not the damage anticipated is damage to improvements or household or other effects on the land on which the works are to be carried out. 10 Section 12B allows an appeal against the Board's decision and is in the following terms: 12B Appeals A person claiming compensation under section 12 or 12A may appeal to the Land and Environment Court against the decision of the Board: (a) as to whether damage has arisen from subsidence or could reasonably have been anticipated, or (b) as to the amount of the payment from the Fund. Competing submissions 11 Mr M J Leeming, appearing for the applicant, submits that on its proper construction s 12A(1)(b) of the Act permits a claim to be made for expenditure incurred for preventive or mitigatory works in anticipation of subsidence, which, in fact, subsequently occurs. Conversely, s 12A(1)(a) applies where subsidence has caused damage. These sections ought to be read together – s 12(1)(b) must apply to a category of expenses not caught by the words of s 12(1)(a). Moreover, s 10(3)(a) of the MSC Act expressly refers to all amounts payable in respect of damage caused by subsidence "or payable under section 12A". Mr Leeming submits there would be no reason to include the words "or payable under section 12A" if the expenses incurred by owners in anticipation of subsidence were excluded. This indicated that s 12A allows compensation to be claimed for work conducted where no subsidence or damage has yet occurred, but where subsidence is reasonably anticipated and subsequently has taken place. 12 Mr P J McEwen SC, appearing for the respondent, contends that compensation under s 12(1)(b) is only available to a claimant where expense has been incurred from a subsidence that has taken place. Mr McEwen says that the words of the section are plain and do not admit ambiguity. If the words are plain and there is no doubt about the Parliament's intention, the literal approach prevails over the purposive approach: Kingston v Keprose (1987) 11 NSWLR 404 at 421 per McHugh JA. Mr McEwen further submits that, because the definition of "subsidence" in the Act is confined to actual subsidence, not prospective or anticipated subsidence, there is no entitlement to claim compensation for expenses incurred to mitigate or prevent damage where subsidence is anticipated. Such a circumstance could have been included in s 12A(1)(b) by adding after the words "from a subsidence that has taken place" the words "or reasonably anticipated to take place". 13 Mr McEwen argues that there is a clear distinction between the Board's unfettered capacity to cause preventative or mitigating works under s 13A of the MSC Act and owners claiming compensation for preventative works - the primary legislative intent was to allow the Board opportunity to expend money prior to subsidence occurring and damage occurring, but that opportunity was not to be allowed to owners. Instead, it is always open to owners to make an application to the Board to carry out preventative works under s 13A. Thereby the Board retains control of moneys expended in anticipation of subsidence damage from anticipated subsidence, which otherwise it would not have control over. Conclusion 14 There appears to be no direct authority on the question before me. It is common ground that the meaning of the critical words "from a subsidence that has taken place" in s 12A(1)(b) should be given work to do. It is common ground that there must have been actually been subsidence before any compensation is payable. I am inclined to agree, however, for reasons which follow that that section extends to compensation for expenditure incurred prior to anticipated subsidence and which subsidence has in fact subsequently occurred. 15 Section 33 of the Interpretation Act 1987 calls for a construction of a statutory provision that would promote the purpose or object underlying the Act, whether or not that purpose or object is expressly stated in the Act, in preference to a construction that would not promote that purpose or object. Moreover, s 34 of the Interpretation Act permits recourse to extrinsic material in the interpretation of a provision of an Act if the provision is ambiguous or obscure (inter alia). The meaning of sub-s 12A(1)(b) is both ambiguous and obscure since the provision refers to expense incurred in preventing or mitigating damage which could be reasonably anticipated from a subsidence that "has taken place", by which time the damage would have occurred. The material that may be considered includes the speech made to a House of Parliament by a Minister on the occasion of the moving by that Minister of a motion that the Bill for the Act be read a second time in that House: s 34(2)(f). 16 The construction to which I am attracted is supported by the Minister's second reading speech supporting the Bill which introduced sub-s 12A(1)(b) into the MSC Act on 2 October 1969: As the Act stands at present the board can carry out works only after damage to improvements by subsidence has arisen. This power to repair is to be supplemented by power to carry out preventative works, as the costs of prevention are often cheaper than of cure. It is recognised also that emergencies may occur when it might be necessary for the owner to carry out works to prevent or mitigate damage arising from a subsidence. In such cases proposed new section 12(a)(1)(b) will empower a claim to be made for the proper and necessary expense so incurred. (See Hansard, 2 October 1969, p 1551) 17 The modern approach to statutory interpretation is literal but not literalistic. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, McHugh, Gummow, Kirby and Hayne JJ said at 384 [78]: … the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. 18 The legislative purpose is clearly stated in the Minister's second reading speech. Unquestionably, sub-s 12A(1)(b) was intended to expand the scope of claims. The subsection is thus intended to operate in the following way: the owner of improvements may incur any necessary and proper expense in preventing or mitigating damage to those improvements which the owner could reasonably have anticipated would otherwise have arisen, but the claim may not be made until the subsidence has taken place. 19 Having regard to the very mischief that the provision was intended to address, the position can be re-stated in the following way. The following four elements must exist in order to make a claim for compensation. (i) expense must have been incurred; (ii) the expense must have been directed to preventing or mitigating damage which is reasonably anticipated; (iii) there must have been subsidence at the time of making the claim; (iv) there has to be a connection between the subsidence and the expense. To hold otherwise would defeat the purpose of the provision as explained by the Minister. 20 Moreover, it would be an absurd consequence if a cheaper expense in preventing or mitigating works avoids a large expense in repairing the damage after the damage has occurred. If the consequence of a reading of a statutory provision leads to an absurd result, then that is another reason to have recourse to the purpose or object underlying the provision, including consideration of the Minister's second reading speech. 21 I answer the question which has been set down for separate determination as follows: Whether for a proprietor to have an entitlement under section 12A(1)(b) of the Mine Subsidence Act 1961 (NSW) to claim compensation for expense incurred in preventing or mitigating reasonably anticipated damage to improvements: (a) it was necessary for a subsidence to have occurred prior to the expenditure being incurred; or alternatively (b) that the expense could be incurred prior to any subsidence occurring. Answer: (a) No (b) Yes I hereby certify that the preceding 21 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd. 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